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05.12.2008

Holiday Euro Winter 2008:
Holiday euro falling primarily because of higher inflation not because of the fall in the value of the euro

  • In many popular holiday destinations, prices are rising more rapidly  than in Austria
  • Weaker euro exchange rate is having an impact in many overseas destinations
  • Greatest increase in value for trips to England, greatest loss in the USA, Asia and Africa

"In the most popular holiday destinations among Austrians, prices have risen more rapidly than in Austria in recent months," says Stefan Bruckbauer, deputy chief economist at Bank Austria, summarising the latest calculation of the holiday euro. Overall, the holiday euro is worth roughly 1 per cent less in the winter of 2008 than it was a year ago. Among Austrians' ten favourite holiday destinations, inflation rates exceeded that in Austria, with the exception of Germany and France. In Croatia, the currency has also risen slightly. Among the top ten holiday destinations, only Turkey and England were able to offset higher inflation with depreciation. The value of the holiday euro has risen by approximately 5 per cent in Turkey and by as much as 14 per cent in England. 

As a result, the holiday euro continues to be worth most in Turkey, followed by Hungary, Croatia and Slovenia. England comes next. "In England, travellers will currently get goods and services worth € 118 for € 100. That is 14 per cent more than last year," continues Bruckbauer and adds, "because of the depreciation in the pound, England is less expensive than Austria for the first time in almost 15 years." The biggest loser among the top holiday destinations this winter is the USA, where the holiday euro is worth some 15 per cent less than it was a year ago because of the marked appreciation of some 13 per cent and higher inflation.

Among the most popular destinations, travellers will again receive less for their money in Italy and far less in Switzerland than in Austria. "As a result of the appreciation in the Swiss franc, Switzerland will this winter once more live up to its longstanding reputation as an expensive destination, as the holiday euro falls below 80 again," says Bruckbauer.

The depreciation in the euro is leading to the fact that this winter on average the value of the holiday euro has fallen sharply overseas compared with a year ago, by 12 per cent in total. "For people travelling overseas, the value of the holiday euro has fallen substantially this year although there are exceptions such as South America, South Africa, New Zealand or Australia," says Bruckbauer. The holiday euro has lost value markedly in the rest of Africa where high inflation has also been accompanied by appreciation. The same is true of Asia, where the value of the holiday euro has fallen by around 9 per cent this year. This is particularly the case in Japan, where travellers receive 34 per cent less for their euros. Overall, this is likely to make Japan the most expensive holiday destination for Austrians at the moment.

In conclusion, the economists at Bank Austria would like to point out that these figures are average values that could differ for individual regions (such as the central region of London, for example). The price levels refer to the average price of goods and services in the individual countries; the prices for individual products could differ substantially (especially for tourists). Therefore, the changes in value are listed for the holiday destinations rather than the values themselves. Furthermore, the fact that price levels are so much more affordable in some holiday destinations than in Austria is primarily due to the high income level in Austria. If the price level were lower in Austria, the income level would also be lower – many of us would most likely not be able to afford to go on holiday.

 charts (PDF; 82 KB)

Enquiries: Bank Austria Economics and Market Analysis
 Stefan Bruckbauer, Tel. 05 05 05 ext. 41951
 E-mail: stefan.bruckbauer@unicreditgroup.at

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